Sony Corporation Case Study

Sony Corporation was established in May 1946 as Tokyo Kogyo Corporation by Masaru Ibuka and Akio Morita, later renamed in January 1958 as it is currently known. The company’s first step of success was building Japan’s first tape recorder, followed by transistor radios which got attention from Japan and in other export markets. The company stocks were first listed on the Tokyo Stock Exchange in December 1957 and later in New York Stock Exchange in September 1970. Now, Sony’s manufacturing plants are located throughout Japan, Europe, and Asia. In addition, the company utilizes third-party contract manufacturers for certain products. Products are marketed worldwide by sales subsidiaries, unaffiliated distributors, as well as direct internet sales.

Planning involves a management’s ability to look into the future and make more proactive instead of reactive decisions which increases the likelihood of the long term survival of an organisation by giving it a competitive advantage. Sony failed to implement new strategies to sustain in the highly competitive and ever changing technological industry. The financial crisis that hit Japan in the early 2007 caused many Japanese firms such as Toshiba, Sony and Panasonic heavy economic loss. However, amid these struggling economic conditions Sony failed to have an effective contingency plan to face the financial crisis or have a restructuring plan in the past 8 years post the crisis. Sony’s failure to have effective operational, tactical and strategic plans has caused a decline in sales number and a lack of innovation. “Sony has lost a lot of brand value to companies like Samsung because they are just not innovative” said Ben Collett head of Asian equities at Sunrise Brokers, in Hong Kong. This clearly shows Sony’s management failed to look into the future and create a competitive advantage for its products. The once tech giants have failed to understand that planning is a never ending function due to the dynamic business environment and strategies have to be constantly reviewed and improved to ensure long term survival of a

Firstly, the company’s technological innovation gradually lost its edge against competitors. Firms such as Apple and Samsung have surpassed and outgrown Sony merely by new innovation and heavy research in new technology. Sony was once known as a tech giant around the globe for some of its most innovative technology such as the Walkman and the PlayStation that created new markets. However, in recent years the company has been unable to keep up with the latest technology and compete with Apple or Samsung. Besides this, the latest technological advancement has also caused Sony a shredded reputation. The cyber-attacks on Sony caused a world-wide sensation in years 2011 and 2014. These cyber-attacks have not only caused a heavy loss (Monetary and customers) to the company, but have also tarnished the brand name due to its incapability to protect customer and employee data. Another influencing environmental factor is economic (Microeconomic and macroeconomic) factors. A large portion of Sony’s sales and assets (more than 75%) are denominated in currencies other than the Yen, and a fluctuation in the foreign exchange rates can affect financial results. The financial crisis in 2007 had also hit Sony hard incurring more losses, due to increased operational cost, decrease in consumer disposable income value, high unemployment rate and inflation. In addition to